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Policies have been framed for consumer protection, look for a good deal now

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Policies have been framed for consumer protection, look for a good deal now

When I wrote the self-help book ‘How to Buy a House’ in 2016, we sold out the first edition in just over a quarter. However, while the wisdom is the same the formats on the ground are different. Policies have made a sea change in the way the business is done. Consumers are verging on belligerent if their project is impacted. Some have turned associates with builders to ensure that held up projects can go through to conclusion.

In this scenario, I decided to come back to you with a series through December 2017, on a cheat code to buying a house in India. The principles are the same but there is slight re-alignment. Even as you read this, if you want a copy of the book ‘How to buy a House’ published by Harper Collins, please send your address to jayashree.kurup@magicbricks.com and we will be happy to send you a Free copy of the book. Indicate your shirt size (S, M, L, XL) and you can flaunt your tee shirt as well.

So, the first question that people are asking today is whether you need to buy a house at all. There is a whole generation that believes in leasing not buying. This pertains to cars, houses, furniture, white goods, just about anything. However, I believe it is important to understand that a house is not just a consumable product. It is an appreciating asset that you are buying, locked at today’s values. This is especially important to understand in a scenario where the market has been flat for over two years and is in a slowdown for at least 6 straight years. Just as you invest in equity, bank deposits and small saving schemes to protect your future, property too spells safety and security for the future.

When the values today are close to those at launch of projects, you stand to gain when you are buying a ready built asset. This explains why most consumers are looking to buy completed or close to completion and not newly launched projects today.

According to an analysis by Sudhir Pai, CEO Magicbricks, “While transactions on the ground are yet to show corresponding uptick, our data suggests that there has been a whopping 61% rise in property seekers over the last 12 months, with the number of active property seekers going up sharply on a YoY basis from 3.4 Lakh in Jul 2016 to 5.5 Lakh in September 2017. The growth trend seems to continue from the last quarter with a 4% sequential quarter-on-quarter growth.

The number of returning users rising by 18% in just one quarter is also a testament to the fact that property seekers are searching vigorously than ever before. A returning property seeker is defined as someone who has been in the market for over a month. The rise in returning users indicates that end-users haven’t exited the market, but are taking longer to finalise a transaction. “Deal-seeking” is the new normal and developers and agents would do well to work on strategies on how to close a transaction in a buyer driven market. “

So does that mean that you should avoid buying into new projects? Not at all. Regulation and policy has ensured that consumer safety has been addressed. Even though the Real Estate (Development & Regulation) Authority (RERA), has been created and states are in

various stages of implementation, it is not that RERA is currently the ultimate panacea for all buyers. However, with the threat of RERA, a national Act, hanging over the states, very few developers will have the courage to blatantly take consumer money and not deliver.

Additionally, a study on Investibility of Residential Real Estate, (http://property.magicbricks.com/mb-product/Residential-realestate-investible-new.pdf) by Magicbricks and KPMG showed that the best returns come to those buyers who buy in the early stages of development and hold the project till completion, before exiting. While the past few years have been marked by inordinate delays, leading to a lack of faith in the system, consumers who want to buy into new projects for future gains should start looking at projects that are registered with RERA. They should also look at developers who have a track record showing intent to deliver, where past projects point to good quality of construction and lifestyle for buyers.

Also, when things go wrong, consumers have realised the power of collaboration and rarely does a consumer fight as an individual. Most are forming pressure groups and are not intimidated by the challenges of moving courts to seek redressal. Courts too have shown their sympathies with the consumer. In the famous Public Interest Litigation (PIL) on the Jaypee Infrastructure insolvency case, the Supreme Court has made clear that unless there is enough money kept aside to meet consumer obligations, no lender will be able to take back their money.

Clearly, in today’s world, the only solution is to build those projects that developers launched and sold to individuals. In such a case, keep looking and buy at best rates because these may not last for over another year and a half.

DISCLAIMER : Views expressed above are the author's own.

Author

E Jayashree Kurup has been a business journalist for over two decades with The Times of India, The Economic Times and Financial Express. She writes on real estate and infrastructure, city management, human resources and management. She is currently the content and research head of Times Business Solutions Limited. Her team at Brix Research, the knowledge centre of the leading property portal magicbricks.com, promoted by the Times Group, gathers and analyses real estate and infrastructure data across 53 Indian cities.

E Jayashree Kurup has been a business journalist for over two decades with The Times of India, The Economic Times and Financial Express. She writes on real . . .

Author

E Jayashree Kurup has been a business journalist for over two decades with The Times of India, The Economic Times and Financial Express. She writes on real estate and infrastructure, city management, human resources and management. She is currently the content and research head of Times Business Solutions Limited. Her team at Brix Research, the knowledge centre of the leading property portal magicbricks.com, promoted by the Times Group, gathers and analyses real estate and infrastructure data across 53 Indian cities.

E Jayashree Kurup has been a business journalist for over two decades with The Times of India, The Economic Times and Financial Express. She writes on real . . .